Retirement crisis: women hardest hit

The necessity for women to focus on their own retirement planning was underscored by the results of the Just Retirement Insights survey, released this week, which shows that 50% of married male respondents do not it a priority to provide their wives with an income upon their death.

While this may be a result of negligence, the effects are not hard to imagine: women’s retirement savings may well be insufficient.

The problem is compounded by the fact that women are not aware that they can and probably will outlive their male counterparts. When males and females were asked what age they thought they would live to, men said 83 on average and women said 79 on average. In reality, the opposite is true – in post-retirement, a woman’s life expectancy is three to four years longer than a man’s. The total life expectancy for a man at age 65 is 83 and for a woman it is 87.

“Unfortunately, living longer brings with it an increased risk of dementia, a degenerative disease of the brain that primarily affects the elderly and is currently on the rise,” says Bjorn Ladewig, longevity actuary at Just. “However, very few people plan for the effect that this disease would have on their ability to make sound financial decisions in retirement.”

The survey shows that only 13% of people have thought about dementia or Alzheimer’s and started planning to protect their financial future (15% had thought about it to some extent, while 72% had not thought about it at all).

The survey provides some additionally startling facts: about two thirds of the respondents believe they are good financial planners, but the reality shows that only 31% have performed any calculations about how much they would need annually in retirement (down from 45% in 2015).

The survey further shows that people’s expectations of how much retirement income they will receive do not match reality. The average rand value of survey respondents’ retirement funds in R1.8m and the anticipated average monthly income is R12 000. But a typical couple retiring will require R2.2m (22% more) to secure that level of income for life, with future increases in income targeting inflation.

South Africans’ retirement priorities are having a guaranteed income for life and being able to leave money for children and grandchildren. While 89% of respondents want a guaranteed income for life (up from 86% in 2015), around 92% of retirees currently invest in living annuities, which typically do not provide a guaranteed income. Running out of money in later years is therefore a very real possibility for many South Africans.